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Will a new face in the mayor's office improve Harrisburg's image?

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Eric Papenfuse won the Democratic primary in Harrisburg's mayoral race. Dan Miller, who finished second, won the GOP primary and could still run in November. Mayor Linda Thompson's loss means the city will have a new mayor. Nevin Mindlin, not pictured here, will run as an Independent in November.

When major financial news organizations send reporters to a city the size of Harrisburg to cover the election for mayor, it usually means things haven't been going well.

That was evidenced Tuesday night, as a Reuters news dispatch described Mayor Linda Thompson's defeat in the Democratic primary. The story began, "The embattled mayor of Pennsylvania's financially crippled capital of Harrisburg was ousted on Tuesday…"

Embattled. Financially crippled. Harrisburg.

No matter who wins in November, the city's next mayor must repair Harrisburg's badly damaged brand, and that could be one of the most formidable aspects of the job.

To some business leaders, the simple fact that there will be a new mayor offers some hope.

National media stories have speculated on whether Harrisburg will end up in bankruptcy. At times, city workers have wondered whether there's enough money to make payroll. Earlier this year, the city was charged with securities fraud for giving inaccurate information to investors.

Aside from the financial crisis, Thompson has produced a host of embarrassing gaffes to make residents wince. The Reuters piece noted that she once referred to a rival - Miller, who is openly gay - as "that homosexual, evil little man." A justified rant about illegal dumping went off the rails when she made an unfortunate reference to a likely culprit as a "scumbag" from Perry County.

For the last few years, such labels and incidents have pained local leaders as they've appeared in articles read by the nation's business elite -- the people who decide things such as whether to move a business to an area.

They counted upwards of two dozen such mentions in the Wall Street Journal. They worried it would smear the entire region.

It compelled them to seed Google with positive items so stories about political fighting, insurmountable debt and potential bankruptcy wouldn't dominate Harrisburg search results.

Regardless, Harrisburg became known far and wide as the "poster child" for municipal crisis.

But might the end finally be in sight?

"I think the next mayor of Harrisburg has a wonderful opportunity to set things right, to put the city on a good track. But it will really depend on what they are bringing to the table," said Nick DiFrancesco, a member of the Capital Region Economic Development Corp. and a former Dauphin County Commissioner.

He added: "A mayor that comes in and shows leadership and a good attitude and surrounds himself with good people will turn that reputation that has been promoted in the Wall Street Journal around very quickly."

'Element of hope'

Others doubt an image makeover will happen so fast.

David Morris, senior editor for Kiplinger's Business Forecast Group, said the region suffered in terms of the desire of businesses to locate or expand here. He further notes businesses are more "on guard" than they've been for decades because of lingering effects of the recession, and potential impacts of the new health care law that fully takes effect in 2014.

So even with a solution to the Harrisburg debt crisis and a mayor that strikes a positive tone, he doesn't expect the negative tide will immediately reverse. "You're still talking a year or more until all that is in the rear view mirror," he said.

Much of the bad reputation flowed from Harrisburg's $370 million incinerator debt, the possibly fraudulent transactions that created it, and the potential for a rare municipal bankruptcy.

Some also sprang from Thompson, and her battles with city council and various local officials, and regular remarks and actions that exasperated or antagonized.

The election night Reuters story quoted from Thompson's gracious concession speech. But it didn't convey what might be the most significant sentiments -- that Thompson believes a deal that's in the works will solve the debt crisis, and she will cooperate with successors to assure a positive legacy.

So will a new mayor solve the image problem?

"I think the new mayor starts off with at least an element of hope. But how long the credibility lasts will depend on the decisions and messages the mayor sends right off the bat regarding fiscal responsibility," said Joel Naroff, a Bucks County-based economist. "I don't think Harrisburg is out of the woods yet."

Anne Deeter Gallaher, a CREDC board member and owner of a marketing and public relations firm, was involved in the effort to counter the damning Google results.

She said she once contacted the Wall Street Journal about a locally-produced op-ed piece highlighting the area's positives, but was turned down.

"It's a branding issue," said said of the impacts of the negative stories. "I'm excited about a change."

For her part, Thompson disputed any contention she has been an impediment to business growth. She cited an array of national publications, including Forbes and Marketwatch.com, which continued to give glowing ratings to Harrisburg and the overall metro area.

She stressed the impact of the national recession, and said, "While the City of Harrisburg has had her own issues, it is unfair to blame the downturn in the market on its leadership." She further blamed much of the negative coverage on media desire to sensationalize and fan controversy.

In a long emailed response to questions about her role in the negative perceptions, she said, "I still believe in the city and believe we can be a model of how to recover from a fiscal disaster that began long before I was Mayor and we will take some very giant steps toward recovery before the end of this year."

'Cautious optimism'

Richard E. Jordan II, the CEO of Smith Land and Improvement Corp., is another who has fretted over the impact of Harrisburg's problems on the region's economic prospects.

In dealing with businesses such as retailers eying the area, "We try to paper over it by saying we're from central Pennsylvania," he said. But they nonetheless realize that includes Harrisburg, he said.

He said the key to overcoming that is for Harrisburg to solve the incinerator debt crisis, and for the next mayor to show good business judgement and project a positive tone.

"It sure would be nice if things got positive coming out of the city, and it would be OK if the news stopped being negative coming out of the city," he said.

Asked about the impact of a new mayor, Gene Barr, the president of the Pennsylvania Chamber of Business and Industry, said, "I think there's some cautious optimism, but we're all going to have to wait and see … We didn't get in this position overnight."

Barr stressed that many other cities are struggling with the problems of crime, debt and trouble schools, so Harrisburg isn't unique. He said state rather than city policies will have much to do with Harrisburg's ability to provide an appealing business environment.

Marti Garrett, the immediate past president of the Greater Harrisburg Area Association of Realtors, said "I think the perception is that things have to get better. They can't get worse. Having a new person at the helm is going to drive us in the right direction."

David Black, president of the Harrisburg Area Chamber and CREDC, said he expects people involved with municipal bonds are already studying Papenfuse and Mindlin.

They'll be hoping for a mayor who will follow through with the recovery plan being led by state-appointed receiver William Lynch and supported by Thompson, he said.

Papenfuse left for vacation this week and wasn't available for comment.

Joyce Davis, a spokeswoman, said he understands the need to work productively with all stakeholders in Harrisburg, and that his words and deeds will travel far.

"The absolute highest ideals of citizenship are called for right now," she said.

Mindlin said, "I think the conduct of our current mayor has been harmful to our situation … She does not project the idea that we are all neighbors working together."

Regarding the city's reputation moving forward, he said outsiders considering investing in Harrisburg need to see that justice prevails in resolving the incinerator debt crisis, and that anyone guilty of fraud is punished.

"We need a just resolution. That is the fasted way to repair the damage that has been done," Mindlin said.

Miller's possible entrance into the general election adds an interesting dynamic. Miller contends bankruptcy is the only way out of the debt crisis. And in an editorial board interview with PennLive earlier this spring, he also described bankruptcy as inevitable, regardless of who wins in November.

Yet even with the negative media portrayals, people interviewed for this story had a hard time naming tangible impacts on the region.

Harrisburg's troubles have coincided with the national economic downturn, making it hard to distinguish what is to blame for any lack of growth. There's also the difficulty of gauging what business-related developments that didn't happen.

Some contend the Harrisburg real state market has suffered, but it hasn't spread to the suburbs. Some business executives have said awareness of Harrisburg's financial problems has given pause to people being recruited for high-level jobs.

Still, the region has continued to fare well in national "best places" surveys regarding things such as quality of life and places to raise a family.

One tangible fallout has been the need to prevent negative perception from becoming reality. That's why business leaders are hoping Harrisburg's next mayor remembers that people from afar are watching.

"I don't know if we have lost opportunity," DiFrancesco said of the consequences of the bad publicity. "But I will say it's not a fun hurdle to overcome when someone expresses interest in the area and you're trying to get them to come here."

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